Gee. You can set up POA at Vanguard online in 2 minites. Why not instead of aggravating yourself about it.

Would the person named as agent then immediately have full access to my accounts?

It's called Agent Authorization. The one you can set up in 2 minutes only allows limited account transactions. But you can fill out a form and get it notarized with 2 witnesses for full Agent Authorization. The agent has full financial access to your taxable and IRA accounts, but not other types of accounts like individual 401Ks. The agent does not have access to your security settings, for instance, at least not by logging in, perhaps by calling in(?). So it's not full access like logging in. Not as far as I can tell, I am a full agent for 2 people. The agent gains access via the agent's own account login. Here's a list of what an agent can do, according to the application form.

• Change your address or your bank account
information.
• Change your beneficiary designations—even
designate himself or herself as beneficiary.
• Buy, sell, and exchange Vanguard mutual funds.
• Buy, sell, and trade in stocks, bonds, and other
securities.
• Engage in margin and/or option trading.
• Obtain information on your accounts.
• Redeem your assets and have the proceeds
mailed in anyone’s name, including the agent’s.
• Transfer your assets to a new or different
registration.
• View beneficiary information online.*
• View statements online.*
• Write checks on your accounts.
• Consult with a CFP® professional about your
accounts and enter into a contract for any advice
service offered by Vanguard.
• Access all your statements and transaction
history—even from years prior to the agent’s
appointment.
• Open a new brokerage account or sign a new
account application.
• Sign any tax information or reporting form
required by federal or state taxing authorities.
• Conduct all other lawful transactions on
your account.

But I guess the agent would have to be able to log into a new brokerage account? Not sure.

Last edited by tadamsmar on Tue Nov 14, 2017 7:27 am, edited 3 times in total.

Gee. You can set up POA at Vanguard online in 2 minites. Why not instead of aggravating yourself about it.

Would the person named as agent then immediately have full access to my accounts?

It called Agent Authorization. The one you can set up in 2 minutes only allows viewing the accounts. But you can fill out a form and get it notarized with 2 witnesses for full Agent Authorization. The agent has full financial access to your taxable and IRA accounts, but not other types of accounts like individual 401Ks. The agent does not have access to your security settings, for instance, at least not by logging in, perhaps by calling in(?). So it's not full access like logging in. Not as far as I can tell, I am a full agent for 2 people. You gain access via their own account login. Here's a list of what an agent can do, according to the application form.

• Change your address or your bank account
information.
• Change your beneficiary designations—even
designate himself or herself as beneficiary.
• Buy, sell, and exchange Vanguard mutual funds.
• Buy, sell, and trade in stocks, bonds, and other
securities.
• Engage in margin and/or option trading.
• Obtain information on your accounts.
• Redeem your assets and have the proceeds
mailed in anyone’s name, including the agent’s.
• Transfer your assets to a new or different
registration.
• View beneficiary information online.*
• View statements online.*
• Write checks on your accounts.
• Consult with a CFP® professional about your
accounts and enter into a contract for any advice
service offered by Vanguard.
• Access all your statements and transaction
history—even from years prior to the agent’s
appointment.
• Open a new brokerage account or sign a new
account application.
• Sign any tax information or reporting form
required by federal or state taxing authorities.
• Conduct all other lawful transactions on
your account.

But I guess the agent would have to be able to log into a new brokerage account? Not sure.

Thanks tadamsmar. My question for "Good Listener" was more a rhetorical question intended to illustrate why his 2 minute approach might not meet the needs/desires of many. Your very thorough post further illustrates exactly why I (and likely others) would NOT settle for the one-size-fits-all "turn over the keys" brokerage agent authorization. A well drafted POA can legally limit the agent from doing anything on your list that you don't want them to.

You gain access via their own account login.

I'm not sure I understand this. Are you saying that if Sam names Joe as authorized agent, then Joe logs in using Sam's username and password? I would expect Joe to access Sam's account through his own login, which would now provide access to Sam's accounts.

I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

I don't know the mechanism for providing for a dedicated additional account, but as a practical matter I would expect most people would just log on as the account owner.

Nope, that is prohibited, considered to be sharing passwords.

An agent logs in as "self", and then can see own accounts (if any) plus the other person's accounts...

... unless the other person has 403b accounts, in which case there is no clue that those even exist. There is NO way for the agent, even a full agent, to VIEW any information in a 403b account, not the total amount, not that it exists.

That is one of the problem.

The agent wants info about the 403b?
Call, spend too much time getting first to the regular core area, have the rep read whatever items you wish to hear, then get transferred to an entirely different "division" for similar readings of anything in the Brokerage part.

Want to know if dividends arrived? Call, ask for a verbal list of any...

NOT what one would expect for a full agent.

The list in a post above about what can be done... doesn't necessarily apply to 403b accounts, not all of the list.

Gee. You can set up POA at Vanguard online in 2 minites. Why not instead of aggravating yourself about it.

Would the person named as agent then immediately have full access to my accounts?

It called Agent Authorization. The one you can set up in 2 minutes only allows viewing the accounts. But you can fill out a form and get it notarized with 2 witnesses for full Agent Authorization. The agent has full financial access to your taxable and IRA accounts, but not other types of accounts like individual 401Ks. The agent does not have access to your security settings, for instance, at least not by logging in, perhaps by calling in(?). So it's not full access like logging in. Not as far as I can tell, I am a full agent for 2 people. You gain access via their own account login. Here's a list of what an agent can do, according to the application form.

My question was not rhetorical. FYI they let you set up limited agent which is NOT read only fully online - which I learned from this thread.

On this topic, do Fidelity net benefits or TIAA have similar options - online and or forms?

Unfortunately, if you have to act for an incapacitated person, the limited agent authorization does not allow the range of actions that might be required. The full agent authorization requires a notarized signature which is often not possible. The agent authorization of an incapacitated person that I described earlier in this discussion is relatively new and a reasonable alternative in those situations.

I'm not sure I understand this. Are you saying that if Sam names Joe as authorized agent, then Joe logs in using Sam's username and password? I would expect Joe to access Sam's account through his own login, which would now provide access to Sam's accounts.

The agent (Joe) access's Sam's account through his own (Joe's) login.I did not word that well .Also, other's have corrected me on the limited Agent Authorization, it does allow some transactions.

There are a couple of questions I have.

1. Does can a limited agent view your beneficiaries? That might be an issue for some who want to keep that confidential. (Not sure about Vanguard, but some brokerages keep this information confidential even from the executor of the will. Each beneficiary has to contact the brokerage.)

2. How full is full agent authorization? For instance, there appears to be no way to set up phone alerts or set up a secondary mailing address of a statement or change other account settings online. I wonder if that can be done in some other way?

#2 is important because Vanguard is against password sharing. Can an full agent really manage account security without using the password of the person that they are acting for?

Last edited by tadamsmar on Tue Nov 14, 2017 7:31 am, edited 5 times in total.

Unfortunately, if you have to act for an incapacitated person, the limited agent authorization does not allow the range of actions that might be required. The full agent authorization requires a notarized signature which is often not possible. The agent authorization of an incapacitated person that I described earlier in this discussion is relatively new and a reasonable alternative in those situations.

It's important to set these up while the person can still provide an notarized signature.

I am glad the Bogleheads are having a full conversation on Agent Authorization.

If you have a password manager you could write a letter to the person with your DPOA and give them the password. Then, this person could use your computer and do anything with any of your accounts that you could do.

Obviously, this is against the rules of most institutions such as Vanguard, and Schwab who insist that you cannot let your DW or DH use your password to do something with your account. However, I believe that this is done quite commonly. When I was handling my FIL's affairs, an online bank refused to honor the DPOA. I used his PW and LOGONID to move the funds to a bank that did honor it. I wonder if your DPOA could be altered to explicitly state that your atty-in-fact is authorized to use your logonids and PW's as necessary?

This POA thing isn't just businesses. The IRS will not accept a POA and insists that you complete their form which allows you to deal with them over just three years of returns. And, then you have to refile for additional years.

2. How full is full agent authorization? For instance, there appears to be no way to set up phone alerts or set up a secondary mailing address of a statement or change other account settings online. I wonder if that can be done in some other way?

I have full agent authorization on my wife's IRA accounts. When I logon with my user name and password, my wife's accounts show up in my summary in the same way as my IRA and the joint account. When I go to the account maintenance page, all options appear to be available for all accounts (although I haven't tested each one to ensure I don't get stopped).

I did log on and checked some of your questions and found the following. I can setup a secondary mailing address for my wife's account and can change other account settings. Unfortunately, phone/email alerts are sent to registered owners only, not agents. The way I managed this was I assisted my wife in logging on to her account years ago and setting up her email address and phone number to be the same as mine.

It's important to set these up while the person can still provide an notarized signature.

I couldn't agree more which is why having VG not accept my valid DPOA was such an unwelcome surprise several years ago. My advice to people now is to check with each and every financial institution early to see what it needs. Clearly another reason why simplification and fewer financial institutions to deal with are a good idea.

If you have a password manager you could write a letter to the person with your DPOA and give them the password. Then, this person could use your computer and do anything with any of your accounts that you could do.

Obviously, this is against the rules of most institutions such as Vanguard, and Schwab who insist that you cannot let your DW or DH use your password to do something with your account. However, I believe that this is done quite commonly. When I was handling my FIL's affairs, an online bank refused to honor the DPOA. I used his PW and LOGONID to move the funds to a bank that did honor it. I wonder if your DPOA could be altered to explicitly state that your atty-in-fact is authorized to use your logonids and PW's as necessary?

My POA grants the same access rights that I have explicitly including the right to recover and change passwords.

The brokerage firms would treat any POA transactions as authorized, that's of course OK.

But what about the fraud reimbursement guarantees from Schwab, Vanguard, or Fidelity? If my computer is hacked then I get reimbursed (unless I am negligent depending on specific language of the guarantee). But what if the POA's computer is hacked? The language in these guarantees could even be interpreted as completely voiding the guarantee if the passwords or shared regardless of whether the sharing was material to the fraud.

These situations don't seem to arise very often and it's hard to determine what would happen.

"But what about the fraud reimbursement guarantees from Schwab, Vanguard, or Fidelity? If my computer is hacked then I get reimbursed (unless I am negligent depending on specific language of the guarantee). But what if the POA's computer is hacked? The language in these guarantees could even be interpreted as completely voiding the guarantee if the passwords or shared regardless of whether the sharing was material to the fraud."

Schwab offers an additional account security tool in the form of a code generating key fob that generates single use codes that one enters in addition to ones PW. So, the best way of avoiding hack issues, is to be positive on your own security....(don't leave the fob on the desk)

If you have a password manager you could write a letter to the person with your DPOA and give them the password. Then, this person could use your computer and do anything with any of your accounts that you could do.

Obviously, this is against the rules of most institutions such as Vanguard, and Schwab who insist that you cannot let your DW or DH use your password to do something with your account. However, I believe that this is done quite commonly. When I was handling my FIL's affairs, an online bank refused to honor the DPOA. I used his PW and LOGONID to move the funds to a bank that did honor it. I wonder if your DPOA could be altered to explicitly state that your atty-in-fact is authorized to use your logonids and PW's as necessary?

My POA grants the same access rights that I have explicitly including the right to recover and change passwords.

The brokerage firms would treat any POA transactions as authorized, that's of course OK.

But what about the fraud reimbursement guarantees from Schwab, Vanguard, or Fidelity? If my computer is hacked then I get reimbursed (unless I am negligent depending on specific language of the guarantee). But what if the POA's computer is hacked? The language in these guarantees could even be interpreted as completely voiding the guarantee if the passwords or shared regardless of whether the sharing was material to the fraud.

These situations don't seem to arise very often and it's hard to determine what would happen.

Here is a question, about someone operating under a DPoA (or any PoA) - and for this, let's try to ignore Vanguard's peculiar treatment of PoA's (as in, refusing to recognize them; let's assume they are operating within PA law, and DO recognize a DPoA, etc., for this):

IF one is operating as any PoA, and uses the account owner's passwords, IS that "sharing"?
The person acting under the PoA is operating "as if" they are indeed that initial person, with the same legal rights.

The above is obviously NOT a legal definition... are there any attorneys here who could weigh in as to whether someone operating under a valid PoA would be considered "sharing" passwords, or would be considered more "as IF they were that account holder", in which case "sharing" doesn't seem to make sense.

While not unconditional recognition of existing DPOA's, they have made changes to allow getting full agent authorization for an incapacitated person with an existing DPOA much easier than it was several years ago.

While not unconditional recognition of existing DPOA's, they have made changes to allow getting full agent authorization for an incapacitated person with an existing DPOA much easier than it was several years ago.

Thanks. That's a bit different from my more general question, but it's definitely relevant to our "Vanguard PoA" issue.

I'm still curious whether legally, someone operating as PoA would be considered to be "sharing" passwords, or simply "operating as the original person with the original person's 'own' passwords"?

It seems that what you are citing would just be a way to arrange an "agent" access, which will not work for our 403b accounts. It's just too unwieldy, especially because we slice and dice and also have both core and brokerage holdings, which would mean speaking with two separate reps in two separate Vanguard areas, just to be able to *listen* to a litany of all holdings/balances/deposits/dividends/cap-gains/sales/etc., or even just to get to two separate people just to confirm that the "balances are as they should be".
And typically, getting to the 403b brokerage rep is nonsensical. First I call the proper phone number. Then I ask for someone who can assist with the "<Employer's 403b BROKERAGE>" holdings. Then I get the regular 403b. They assure me they can help, and then when they can't find what I'm asking about, THEN they decide that no, they actually can't help. So most often at that point, I get switched to the "brokerage area". But then... they can't help with a *403b* brokerage question/access even though I emphasized that particular combo (plus Employer's name, which apparently means yet another dedicated group)... and 'round we go.

It's just so much easier when "DH logs in" and then hands his laptop to me. (He wants nothing to do with any of this, and I'm a numbers person, etc., and am very interested, etc.)

But with a legal DPoA, I should be able to "do it all myself", online, same as he could/would.IF Vanguard played by the *legal* rules, that is.

I'm noticing that the Uniform regs seem to allow for reimbursement of legal fees if a covered institution refuses to comply with that new "outside" PoA statute. I need to look into that again.
It's just outrageous that Vanguard knowingly and purposefully refuses to comply with state law.
Not only is it "wrong", but it's a royal pain for us, and would get much, much more difficult IF DH did in fact become incapacitated. Eventually, we'd probably just move the 403b monies out, but he's got very generous short and long-term disability coverage (plus accrued sick-or-vacation time - forget which keeps building up - so it would be quite some time before he ended up "separating" such that we could move the money even if we wanted to sooner.

I am currently going through this with my mother who had a stroke. I do not have a POA yet she just recently became coherent again so I am planning to get one as soon as I can arrange a notary with the hospital.

I've done pretty well with simple access to her online accounts, checks, and debit cards. I set all her online accesses up since she had very little technical understanding. The bills come in and I pay them either through bill-pay, debit, or occasionally a check. On a few occasions I've had to call up and pretend to be her to deal with billers and such and so far noone has questioned me despite me being a male and her being female with a female name. This has worked well for 6 months.

I think your best bet is just to give your online passwords and cards/checks to your intended POA and deal with it off the books as much as possible. Once the legal system becomes involved it just gets very messy and expensive.

It sounds like Vanguard is (sort of) converting the durable POA to a springing POA by requiring a doctor to sign off on incapacity. If they followed the law, then that would not be necessary. I haven't heard a good reason why Vanguard thinks it is above the law.

This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

If you have a password manager you could write a letter to the person with your DPOA and give them the password. Then, this person could use your computer and do anything with any of your accounts that you could do.

Obviously, this is against the rules of most institutions such as Vanguard, and Schwab who insist that you cannot let your DW or DH use your password to do something with your account. However, I believe that this is done quite commonly. When I was handling my FIL's affairs, an online bank refused to honor the DPOA. I used his PW and LOGONID to move the funds to a bank that did honor it. I wonder if your DPOA could be altered to explicitly state that your atty-in-fact is authorized to use your logonids and PW's as necessary?

My POA grants the same access rights that I have explicitly including the right to recover and change passwords.

The brokerage firms would treat any POA transactions as authorized, that's of course OK.

But what about the fraud reimbursement guarantees from Schwab, Vanguard, or Fidelity? If my computer is hacked then I get reimbursed (unless I am negligent depending on specific language of the guarantee). But what if the POA's computer is hacked? The language in these guarantees could even be interpreted as completely voiding the guarantee if the passwords or shared regardless of whether the sharing was material to the fraud.

These situations don't seem to arise very often and it's hard to determine what would happen.

Here is a question, about someone operating under a DPoA (or any PoA) - and for this, let's try to ignore Vanguard's peculiar treatment of PoA's (as in, refusing to recognize them; let's assume they are operating within PA law, and DO recognize a DPoA, etc., for this):

IF one is operating as any PoA, and uses the account owner's passwords, IS that "sharing"?
The person acting under the PoA is operating "as if" they are indeed that initial person, with the same legal rights.

The above is obviously NOT a legal definition... are there any attorneys here who could weigh in as to whether someone operating under a valid PoA would be considered "sharing" passwords, or would be considered more "as IF they were that account holder", in which case "sharing" doesn't seem to make sense.

I just thought of this, given the above discussion...

Thanks.

RM

They say is 2 different ways. "Do not share" and "This protection does not apply to unauthorized activity caused in whole or in part by your fraudulent, intentional, or negligent acts or omissions, including activity by a person whom you have intentionally or negligently permitted to transact in your account, or to whom you have intentionally or negligently given access to security information relating to your account."

If you have a password manager you could write a letter to the person with your DPOA and give them the password. Then, this person could use your computer and do anything with any of your accounts that you could do.

Obviously, this is against the rules of most institutions such as Vanguard, and Schwab who insist that you cannot let your DW or DH use your password to do something with your account. However, I believe that this is done quite commonly. When I was handling my FIL's affairs, an online bank refused to honor the DPOA. I used his PW and LOGONID to move the funds to a bank that did honor it. I wonder if your DPOA could be altered to explicitly state that your atty-in-fact is authorized to use your logonids and PW's as necessary?

My POA grants the same access rights that I have explicitly including the right to recover and change passwords.

The brokerage firms would treat any POA transactions as authorized, that's of course OK.

But what about the fraud reimbursement guarantees from Schwab, Vanguard, or Fidelity? If my computer is hacked then I get reimbursed (unless I am negligent depending on specific language of the guarantee). But what if the POA's computer is hacked? The language in these guarantees could even be interpreted as completely voiding the guarantee if the passwords or shared regardless of whether the sharing was material to the fraud.

These situations don't seem to arise very often and it's hard to determine what would happen.

Here is a question, about someone operating under a DPoA (or any PoA) - and for this, let's try to ignore Vanguard's peculiar treatment of PoA's (as in, refusing to recognize them; let's assume they are operating within PA law, and DO recognize a DPoA, etc., for this):

IF one is operating as any PoA, and uses the account owner's passwords, IS that "sharing"?
The person acting under the PoA is operating "as if" they are indeed that initial person, with the same legal rights.

The above is obviously NOT a legal definition... are there any attorneys here who could weigh in as to whether someone operating under a valid PoA would be considered "sharing" passwords, or would be considered more "as IF they were that account holder", in which case "sharing" doesn't seem to make sense.

I just thought of this, given the above discussion...

Thanks.

RM

They say is 2 different ways. "Do not share" and "This protection does not apply to unauthorized activity caused in whole or in part by your fraudulent, intentional, or negligent acts or omissions, including activity by a person whom you have intentionally or negligently permitted to transact in your account, or to whom you have intentionally or negligently given access to security information relating to your account."

But my question is more about the legal definition/usage/etc., of that DPoA (or any PoA) and any person operating with one, and not really about the usage/definition of "sharing" or "permitted to use", etc.

IF that person (the person operating with the Power) is considered "to be as if the original account owner" (sorry for clumsy non-legal terminology), then does any of that (e.g., Vanguard's) prohibited sharing, "permitting to use", or however phrased, even remain relevant?

OR... is it really that the person operating with the Power "IS" considered sort of to be the original owner, in this context. In other words, would this no longer be considered as "sharing" or "permitting to use", as it isn't really "permission". Would it be more like legally operating as if one is the owner.

I hope I made that clear.
IF that were somehow to be the case legally, then in a way, that should bypass Vanguard's "password rules", and one could do everything "as if" owner without risking anything more than the actual owner would risk, in terms of some other account compromise.

I'm just not that clear about how the person with a legally valid DPoA (or any PoA), and their actions, is "considered", legally, compared with the actual account owner.
Is the person operating with a PoA no different than someone "just acting with regular, every day permission", or is it a different legal status?

"This protection does not apply to unauthorized activity caused in whole or in part by your fraudulent, intentional, or negligent acts or omissions, including activity by a person whom you have intentionally or negligently permitted to transact in your account, or to whom you have intentionally or negligently given access to security information relating to your account."

But it would appear that for you to lose the protection, it is not enough that you gave someone your login information. It had to result in unauthorized activity conducted by that person. As long as the holder of your DPOA does not engage in, presumably illegal, unauthorized activity, Vanguard is not off the hook. Or, at least that is how this nonlawyer reads it.

We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either |
--Swedroe |
We assume that markets are efficient, that prices are right |
--Fama

They say is 2 different ways. "Do not share" and "This protection does not apply to unauthorized activity caused in whole or in part by your fraudulent, intentional, or negligent acts or omissions, including activity by a person whom you have intentionally or negligently permitted to transact in your account, or to whom you have intentionally or negligently given access to security information relating to your account."

I'm no lawyer but I could parse this two ways. If I were VG defending not sharing, I'd focus on the words "intentional(ly)" since this seems to preclude giving your logon info to anyone else. If I were me defending sharing, I'd focus on the words "unauthorized activity" and take the position that my actions were in fact authorized by the DPOA. It would be interesting to know if these questions have been asked and answered by the legal system. As a practical matter, it's unclear how VG would ever know this had happened unless the other party filed a complaint that some transaction should be reversed because it was fraudulent. However, it's tough to make that claim against someone to whom you've given a DPOA.

It seems that what you are citing would just be a way to arrange an "agent" access, which will not work for our 403b accounts.

I didn't realize you were struggling with access issues to a 403b. While the change I mentioned makes things a lot easier for most situations, that one is still a pain. I wonder why it's treated so differently?

Just want to note that there is no law or regulation that requires Vanguard to reimburse you due to a fraud that was not due to a fault in their systems. Many brokerages don't give a reimbursement pledge, but the big three mutual fund companies do. And, there is no case law that bears directly on the matter. It has been the practice of brokerages to reimburse if the client was not negligent and reported the fraud in a timely fashion. Some argue that the brokerage would be forced to reimburse by the courts or the SEC or the fear of adverse publicity.

Many years ago you could in fact setup full agent authorization on-line at VG but they changed that some time ago. Now you can set-up only a very limited authorization on-line. For full authorization you have to use their paper form and get the signatures notarized.

Be aware that if you are grandfathered as an agent under the old system and your parents upgrade their account from a MF to brokerage account, that grandfathering is no longer valid. You'll have to submit the paperwork consistent with VG's new requirements.

It use to be easier, but now adding Vanguard full agent authorization requires you, two witnesses that are not the agent, and a notary. Four people together at the notary's desk, including the notary. It's the most elaborate requirement for notarizing a form that I have ever encountered. My bank (Wells Fargo) will notarize forms, but they would not provide the witnesses, but my daughter said that her bank provided witnesses for some real estate forms. I waited till I had some relatives staying with us to get it done.

It use to be easier, but now adding Vanguard full agent authorization requires you, two witnesses that are not the agent, and a notary. Four people together at the notary's desk, including the notary. It's the most elaborate requirement for notarizing a form that I have ever encountered. My bank (Wells Fargo) will notarize forms, but they would not provide the witnesses, but my daughter said that her bank provided witnesses for some real estate forms. I waited till I had some relatives staying with us to get it done.

I agree. When we did our Full Agent Authorization forms, we met at the hospital, used its notary, and asked a couple of nurses nearby to be witnesses. It was an ordeal. However, it STILL turned out to be easier than what we went through in the past with medallion signature guarantees.

I can vouch for the ease of ultimately being a Full Agent. All of the accounts show up (although we no longer have any 403s) and we have not run into any limitations at all.

All of that said, if one of us were to die and the other be incapacitated, I'm sure the DPOA would have a difficult time stepping in with some brokers and banks. I'm still trying to figure out a smooth transition with this and I'm not sure that's possible.

Durable POAs present a huge risk of fraud or malfeasance. To be useful they have to give the agent immediate unfettered power over the principal's assets. Financial institutions do not like getting caught in the middle and potentially be exposed to liability. Durable POAs are generally not drafted to protect financial institutions. That's why financial institutions like using their own forms - they can insert terms and conditions that limit their liability. Institutions like Vanguard have decided the lesser of the two evils is to face a lawsuit and be compelled by court order to honor a durable POA. Sometimes bringing in a lawyer to deal with the legal department and make things happen without the need to obtain a court order.

Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

Durable POAs present a huge risk of fraud or malfeasance. To be useful they have to give the agent immediate unfettered power over the principal's assets.

This is either simply not true or else we are not all understanding the term "durable" to mean the same thing (probably the later). Some have interpreted "durable" to generally mean that the POA will not be impacted by the grantor's ultimate incapacitation (the real meaning of durable should be spelled out within a properly executed POA). Also, a POA does not need to grant "unfettered" power. It can spell out terms and limitations on such things as investment powers and powers to buy or sell property/businesses/etc. I understand that in many cases fraud can not be prevented (only prosecuted), but malfeasance is much less likely if a person is exercising a power that they are not legally authorized to execute (which likely brings us back to fraud).

Institutions like Vanguard have decided the lesser of the two evils is to face a lawsuit and be compelled by court order to honor a durable POA. Sometimes bringing in a lawyer to deal with the legal department and make things happen without the need to obtain a court order.

Probably easier just to move to a brokerage who is a bit more reasonable about such things. I know of one with a local brick and mortar who (as mentioned earlier) willingly had their legal department review POAs when they were established and provided "pre-approval" of their use in the event of incapacitation. This was a whole lot easier than getting a lawyer to challenge an out of state brokerage house's silly rules (which at best would just create tremendous delays at a time when delays could be very painful).

I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Durable POAs present a huge risk of fraud or malfeasance. To be useful they have to give the agent immediate unfettered power over the principal's assets.

This is either simply not true or else we are not all understanding the term "durable" to mean the same thing (probably the later). Some have interpreted "durable" to generally mean that the POA will not be impacted by the grantor's ultimate incapacitation (the real meaning of durable should be spelled out within a properly executed POA). Also, a POA does not need to grant "unfettered" power. It can spell out terms and limitations on such things as investment powers and powers to buy or sell property/businesses/etc. I understand that in many cases fraud can not be prevented (only prosecuted), but malfeasance is much less likely if a person is exercising a power that they are not legally authorized to execute (which likely brings us back to fraud).

Typically:

"Durable power of attorney" means that the incapacitation of the principal does not affect the power of the agent to act. A "non-durable POA" terminates the agent's power to act upon the incapacity of the principal. If a POA's language is unclear, state law may impose a default status.

"Springing POA" give the agent power to act only at such time as the principal becomes incapacitated. There may be issues with springing POAs because incapacity has to shown. Although usually well intentioned it can introduce delay and extra cost as one or more physicians has to render an opinion. There maybe HIPPA issues. The definition of incapacity has to be carefully defined. And what if there is a disagreement about the principal's incapacity?

"General POA" gives the agent very broad financial powers, almost the same as the stepping into the shoes of the principal. Durable General POA is typically what is used in estate planning because the future is unknown e.g. the principal may be incapcitated for a very long time, and it may be necessary to manage a business, or to sell all the assets to pay medical bills.

"Special POA" or "Limited POA" give the agent limited powers for specific situations. Examples might include: an advanced healthcare directive (a.k.a. living will); or empowering a lawyer to sign on behalf of the absent seller at sale of a house.

Unless otherwise stated, POA become effective when signed.

Upon the death of the principal, all of agent's powers terminate under any POA.

Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

Durable POAs present a huge risk of fraud or malfeasance. To be useful they have to give the agent immediate unfettered power over the principal's assets. Financial institutions do not like getting caught in the middle and potentially be exposed to liability. Durable POAs are generally not drafted to protect financial institutions. That's why financial institutions like using their own forms - they can insert terms and conditions that limit their liability. Institutions like Vanguard have decided the lesser of the two evils is to face a lawsuit and be compelled by court order to honor a durable POA. Sometimes bringing in a lawyer to deal with the legal department and make things happen without the need to obtain a court order.

Very true indeed.

One kind of thing that a "principal" can do (depending on the details) to reduce the probability of the designted "attorny-in-fact" abusing the powers of a PoA is to not actually give the PoA document to that person, but have it in a place or with some trusted person that could access it when really needed. As an example, I might create a durable, general PoA to my son, but not give it to him. I might put it in a fireproof cabinet in my house - and not give him a key to my house - but tell him that in case of my incapacity - the document is in the cabinet.

One kind of thing that a "principal" can do (depending on the details) to reduce the probability of the designted "attorny-in-fact" abusing the powers of a PoA is to not actually give the PoA document to that person, but have it in a place or with some trusted person that could access it when really needed. As an example, I might create a durable, general PoA to my son, but not give it to him. I might put it in a fireproof cabinet in my house - and not give him a key to my house - but tell him that in case of my incapacity - the document is in the cabinet.

OK. So now you are incapacitated. Your son, whom you do not trust enough to give the DPOA, knows that it exists and where it is. But your son has no access to it. I find it hard to see how you are better off than if you had never created it.

Not everyone has someone they trust who could serve as the attorney in fact. But for those who do, it hardly makes sense to establish hurdles to make it difficult for them to act when needed.

We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either |
--Swedroe |
We assume that markets are efficient, that prices are right |
--Fama

Very true indeed.
One kind of thing that a "principal" can do (depending on the details) to reduce the probability of the designted "attorny-in-fact" abusing the powers of a PoA is to not actually give the PoA document to that person, but have it in a place or with some trusted person that could access it when really needed. As an example, I might create a durable, general PoA to my son, but not give it to him. I might put it in a fireproof cabinet in my house - and not give him a key to my house - but tell him that in case of my incapacity - the document is in the cabinet.

OK. So now you are incapacitated. Your son, whom you do not trust enough to give the DPOA, knows that it exists and where it is. But your son has no access to it. I find it hard to see how you are better off than if you had never created it.
Not everyone has someone they trust who could serve as the attorney in fact. But for those who do, it hardly makes sense to establish hurdles to make it difficult for them to act when needed.

Not exactly. In this scenario, I would tell him where it is and ONLY IN CASE OF MY INCAPACITY - how to get into the house. This not, currently, our PoA arrangement - but may be in the future. Maybe - give a house key to the neighbors - and if I had a stroke and was in the hoospital - get the key from them -- OR, get the house key from my things at the hospital.

One kind of thing that a "principal" can do (depending on the details) to reduce the probability of the designted "attorny-in-fact" abusing the powers of a PoA is to not actually give the PoA document to that person, but have it in a place or with some trusted person that could access it when really needed. As an example, I might create a durable, general PoA to my son, but not give it to him. I might put it in a fireproof cabinet in my house - and not give him a key to my house - but tell him that in case of my incapacity - the document is in the cabinet.

OK. So now you are incapacitated. Your son, whom you do not trust enough to give the DPOA, knows that it exists and where it is. But your son has no access to it. I find it hard to see how you are better off than if you had never created it.

Not everyone has someone they trust who could serve as the attorney in fact. But for those who do, it hardly makes sense to establish hurdles to make it difficult for them to act when needed.

Exactly. It is just like the situation where somebody tells a person that they are nominated as personal representative in a will, but refuse to give that person a copy of the will or a key to their house in order to (somewhat?) legally take possession of the document upon death. I know a person in this situation, and they will refuse to enter the house without a court order in order to avoid any accusations of impropriety from other heirs. Why set up those you expect to carry out your wishes for headaches (or worse)?

I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Very true indeed.
One kind of thing that a "principal" can do (depending on the details) to reduce the probability of the designted "attorny-in-fact" abusing the powers of a PoA is to not actually give the PoA document to that person, but have it in a place or with some trusted person that could access it when really needed. As an example, I might create a durable, general PoA to my son, but not give it to him. I might put it in a fireproof cabinet in my house - and not give him a key to my house - but tell him that in case of my incapacity - the document is in the cabinet.

OK. So now you are incapacitated. Your son, whom you do not trust enough to give the DPOA, knows that it exists and where it is. But your son has no access to it. I find it hard to see how you are better off than if you had never created it.
Not everyone has someone they trust who could serve as the attorney in fact. But for those who do, it hardly makes sense to establish hurdles to make it difficult for them to act when needed.

Not exactly. In this scenario, I would tell him where it is and ONLY IN CASE OF MY INCAPACITY - how to get into the house. This not, currently, our PoA arrangement - but may be in the future. Maybe - give a house key to the neighbors - and if I had a stroke and was in the hoospital - get the key from them -- OR, get the house key from my things at the hospital.

Does a neighbor have a legal right to transfer possession of the house to somebody else? Is it legal to "retrieve" a house key from a person who is lying incapacitated in a hospital?

I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Does a neighbor have a legal right to transfer possession of the house to somebody else? Is it legal to "retrieve" a house key from a person who is lying incapacitated in a hospital?

Sure - if I tell that neighbor to let my son in the house if something happens to me.

You might be right, although I'm not a lawyer. That said, if I were either your son or the neighbor, I would likely refuse to play this game. Why wouldn't you just give a key to your son? I want my adult children to have keys to my house. Who knows when I might need their help?

I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Does a neighbor have a legal right to transfer possession of the house to somebody else? Is it legal to "retrieve" a house key from a person who is lying incapacitated in a hospital?

Sure - if I tell that neighbor to let my son in the house if something happens to me.

You might be right, although I'm not a lawyer. That said, if I were either your son or the neighbor, I would likely refuse to play this game. Why wouldn't you just give a key to your son? I want my adult children to have keys to my house. Who knows when I might need their help?

OK - so maybe in this scenario, we give a key to our son. If the executed PoA stays in our house, then I know someone else doesn;t use identity theft of our son to get at my accounts.

Durable POAs present a huge risk of fraud or malfeasance. To be useful they have to give the agent immediate unfettered power over the principal's assets. Financial institutions do not like getting caught in the middle and potentially be exposed to liability. Durable POAs are generally not drafted to protect financial institutions. That's why financial institutions like using their own forms - they can insert terms and conditions that limit their liability. Institutions like Vanguard have decided the lesser of the two evils is to face a lawsuit and be compelled by court order to honor a durable POA. Sometimes bringing in a lawyer to deal with the legal department and make things happen without the need to obtain a court order.

Very true indeed.

One kind of thing that a "principal" can do (depending on the details) to reduce the probability of the designted "attorny-in-fact" abusing the powers of a PoA is to not actually give the PoA document to that person, but have it in a place or with some trusted person that could access it when really needed. As an example, I might create a durable, general PoA to my son, but not give it to him. I might put it in a fireproof cabinet in my house - and not give him a key to my house - but tell him that in case of my incapacity - the document is in the cabinet.

Wait.

IF this is a concern, why is a DURABLE PoA susceptible to this, and not other PoA's?
If a regular PoA, then the same "risk" presumably occurs right away.
If a Springing PoA, then the same "risk" presumably occurs upon incapacitation.

Why would a person name someone as a PoA of any flavor if they had such serious concerns?

(Is it really "better" to be looted after incapacity than before, when one can maybe notice something is going wrong, for example? And perhaps fend for one's self?)

Does a neighbor have a legal right to transfer possession of the house to somebody else? Is it legal to "retrieve" a house key from a person who is lying incapacitated in a hospital?

Sure - if I tell that neighbor to let my son in the house if something happens to me.

You might be right, although I'm not a lawyer. That said, if I were either your son or the neighbor, I would likely refuse to play this game. Why wouldn't you just give a key to your son? I want my adult children to have keys to my house. Who knows when I might need their help?

OK - so maybe in this scenario, we give a key to our son. If the executed PoA stays in our house, then I know someone else doesn;t use identity theft of our son to get at my accounts.

I am really wondering why people don't want to give house keys to their adult children regardless of the circumstances. I'm sure there are exceptional cases where adult children have a history of misbehavior, but that certainly shouldn't be the case where said child was being appointed as POA. That said, I fully realize that there are people out there that for whatever reason sill trust a neighbor with a house key but not their own child.

I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

I am really wondering why people don't want to give house keys to their adult children regardless of the circumstances. I'm sure there are exceptional cases where adult children have a history of misbehavior, but that certainly shouldn't be the case where said child was being appointed as POA

OK - NOW - our adult son has become a responsible and productive member of society. He is engaged to what seems to be a very responsible young woman. I would trust him/them with a key to our house. A few years ago, as a younger adult - the story was very different. In numerous ways, he was not very "responsible", and we than had justification for not trusting him.

The next time we update PoAs, we will probably name him. In the meantime, we have siblings that can act with a PoA.

I had limited authorization for my widowed sister's Vanguard account for a number of years. This past summer I obtained full authorization from Vanguard. The full agent authority titled "Agent Authorization" required her signature in the presence of a notary and two additional witnesses. She also has an annuity (that her husband had acquired with another institution) that I transferred for her to Vanguard a number of years ago. This required another form titled “Variable Annuity Power of Attorney Authorization” to give me full authority for the annuity. This form required her signature in the presence of a notary but no witness signatures were required.

We both have accounts with Vanguard so when I sign on to my account her accounts show up there as well. I can also view her accounts by signing onto her account.

P.S. I’ve had durable power of attorney for my sister for the past 6 years. She's 87 and is in an assisted living facility. The reason I got of my duff and finally did the authorization with Vanguard was because the facility recently stated that they would have a notary at their facility for 2 or 3 days a week.

I have perfectly friendly relationships with my neighbors. If one of them asked me to hold a spare key for them, I would be happy to do so.

But if they asked me to turn it over to an adult child "if and only if" they become incapacitated I would decline. Just like a springing POA, how am I supposed to know if my neighbors are incapacitated? Take the word of the son when he shows up looking for the key? Investigate it on my own??? If my neighbor does not trust this person to let them in the house how in the world am I going to know when to trust him? The son shows up, says neighbor is incapacitated and I give him the key. Son steals something. Now it is my fault. No thanks.

If the son needs the DPOA but has to go through the neighbor to get access that could introduce a lot of delay. What if the neighbor is out of town? What if the son no longer lives in town? Now he has to make a trip to neighbor just to get the document.

There are enough problems when the DPOA is needed. No need to make it worse.

We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either |
--Swedroe |
We assume that markets are efficient, that prices are right |
--Fama